Bad News For Book Publishers: More Authors Selling E-Books Direct

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Today we had a conversation with Mark Coker, CEO of e-book distributor Smashwords. At his company there has been a large increase in reputable authors releasing e-books themselves versus going through their publishers.

Specifically:

The number of authors self-publishing e-books that were previously released in print by major publishers (commonly referred to as reverted rights) has increased the past year from less than five to as high as several dozen currently.

In some cases, authors are making more money selling cheap e-books than print books since they sell more of them.

If this trend continues, which we think it will, e-book distributors will increasingly cut more profitable deals with authors and cut out the publishers. This will force publishers to cut the wholesale price for e-books they do have the rights for, which they are trying desperately to avoid doing.

Smashwords is an ebook publishing and distribution platform for ebook authors, publishers, and readers. It offers multi-format, DRM-free ebooks that are readable on any e-reading device.

MAJOR AUTHORS SELF-RELEASING OLD TITLES IN E-BOOKS FORMAT

The authors releasing their e-books through Smashwords are major authors with strong track records and entrenched fan bases. This is why they can sell books themselves without the marketing muscle of publishers (though many claim publishers don't market books much anymore anyway). Of course, this is also why the publishers need these authors so badly, because there is less risk in releasing their books. Some of the authors self-releasing currently include:

SOME AUTHORS MAKING MORE MONEY SELLING CHEAPER E-BOOKS THAN EXPENSIVE PRINT BOOKS

This is critical: We believe that lower prices on books will lead to higher volumes of book sales, which will offset some if not all of the revenue and royalties lost in the price cuts. The experience of the e-book pioneers appear to support this.

If publishers and authors can make more money from selling a greater volume of cheaper e-books than print editions, wholesale prices sold to e-book distributors should come down and everyone from book publishers to authors to e-book distributors should be able to turn a profit (currently the distributors are losing money).

The data is very limited, but this is happening in some cases. For example, in one case, author VJ Chambers made about $310 selling her latest e-book for $5 through Smashwords versus about $275 in revenue for the print edition through Amazon, which sells for about $13. Even more telling is that Chambers only made about $60 on the Amazon Kindle, since this ebook was sold for $7 in their store.

These cases are very rare and Chambers likely steered many of her customers to the lower Smashwords price through her website, but it does demonstrate that more volumes of e-books can be sold when the price is lowered enough and this could result in greater overall revenue for distributors and publishers alike.

Disclosure: Jeff Bezos is an investor in Business Insider through his personal investment company Bezos Expeditions.